Mild signs of recovery following a healthy pullback with key support near 1,625 zones 

Technical pick: PBBANK

KLCI: 1640.94 (6)
DOW: 42454.12 (-57.9)
MSCI Asia: 192.54 (1.4)
FCPO (RM): 4271 (38)
BRENT (USD): 79.4 (2.82)
USDMYR: 4.2925 (0.011)
SGDMYR: 3.2824 (-0.001)
EURMYR: 4.6933 (-0.002)
AUDMYR: 2.8867 (0.002)
GBPMYR: 5.6135 (0.01)
US: 10-yr yield (%) 4.0608 (-0.012)
BNM:10-yr yield (%) 3.769 (0.012)

Asia/US. Ahead of the key US CPI data and the start of the 3Q24 earnings season, Asian markets ended mostly higher in line overnight record close on Dow as investors assessed Sep FOMC minutes and lingering tensions in the Middle East. Meanwhile, the SHCOMP rebounded 1.32% after sliding 6.6% previously as investors awaited the outcome of the government’s planned briefing on fiscal policy on Oct 12. Ahead of the PPI data and the key US banks results tonight (i.e. JPM, WFC, BFK and BK), the Dow slipped 58 pts after a two-day surge of 558 pts following a hotter-than-expected core CPI inflation report. Additionally, initial jobless claims surged to a fresh 14M high at 258K, amplifying the debate on whether the Fed will opt for a smaller 25 bps cut or a pause on Nov 7 meeting. 

Malaysia. Tracking the record close on Dow and higher regional markets, KLCI gained 6 pts to 1,640.9 after recent healthy consolidation. Market breadth improved to 1.31 vs 0.97 previously while daily volume fell 18% to 2.64bn shares valued at RM2.3bn. Foreign institutions were major net buyers for a 3rd session (+RM54m, Oct: -RM827m, YTD: +RM2.73bn) while local retailers (-RM20m, Oct: +RM13m, YTD: -RM4.85bn) and local institutions (-RM34m, Oct: +RM814m, YTD: +RM2.12bn) emerged as major net sellers.

Outlook After a healthy pullback from 1,684 (YTD high) to a low of 1,625 (Oct 4), KLCI is consolidating upward to end at 1,640.9 yesterday. Nevertheless, the index could face choppy trading ahead of the Budget 2025 announcement on Oct 18 (support: 1,606-1,625; resistance: 1,652-1,659-1,684), given the weak buying momentum as investors weigh big banks earnings, lingering geopolitical tensions in the Middle East and expectations of fresh stimulus from China’s MOF briefing tomorrow.

Technically, PBBANK will likely to break above the downtrend channel after consolidating well above RM4.40-4.50 support levels is the past two months, underpinned by improving technical readings. A successful breakout above the downtrend line will spur greater upside to retest RM4.68 (30D MA), RM4.79 (upper BB) and RM4.84 (52w high) levels. 

Source: Hong Leong Investment Bank Research - 11 Oct 2024